Table of Contents
1.0
Executive Summary..............................................................................................................iii
2.0
Business Introduction .......................................................................................................... 1
2.1
Introduction...................................................................................................................... 1
2.2
Objectives ......................................................................................................................... 1
2.3
Success Factors................................................................................................................. 1
3.0
Operations Plan.................................................................................................................... 1
3.1
Location ............................................................................................................................ 1
3.2
Floor Plan.......................................................................................................................... 2
3.3
Business Hours ................................................................................................................. 3
3.4
Suppliers/Service Providers ............................................................................................. 3
3.5
Capital Budget .................................................................................................................. 3
3.6
Operating Expenses.......................................................................................................... 3
3.7
Working Capital Planning ................................................................................................. 4
4.0
Human Resources ................................................................................................................ 5
4.1
Organizational Structure .................................................................................................. 5
4.2
Job Descriptions ............................................................................................................... 6
4.3
Shareholder’s Agreement ................................................................................................ 7
4.4
Human Resources Strategy .............................................................................................. 7
4.5
Weekly Schedule .............................................................................................................. 7
4.6
Human Resources Expenses ............................................................................................. 8
5.0
Marketing Plan ..................................................................................................................... 8
5.1
Products/Service .............................................................................................................. 8
5.2
Price .................................................................................................................................. 8
5.3
Place ................................................................................................................................. 9
5.4
Promotion ........................................................................................................................ 9
5.5
Positioning Statement .................................................................................................... 11
5.6
Competition.................................................................................................................... 11
5.7
Policies/Purchasing Patterns .......................................................................................... 13
5.8
Marketing Budget........................................................................................................... 13
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5.9
6.0
Estimated Sales Projections ........................................................................................... 14
Financial Plan ..................................................................................................................... 14
6.1
Financial Breakdown ...................................................................................................... 14
6.2
Critical Variables ............................................................................................................. 15
6.3
Break-even Analysis ....................................................................................................... 15
6.4
Sensitivity Analysis ......................................................................................................... 16
6.5
Cash Flow and Profitability............................................................................................. 16
6.6
Average Owner Compensation ...................................................................................... 16
6.7
Contingency Plan ............................................................................................................ 17
6.8
Economic Forecast ......................................................................................................... 17
7.0 Summary ................................................................................................................................. 17
References .................................................................................................................................... 19
Appendix A: Financial Analysis ...................................................................................................... 20
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1.0
Executive Summary
The Locker Room Sporting Goods store strives to provide quality hockey equipment and
apparel, while making hockey expertise and services accessible to their customers. The Locker
Room has everything a hockey player needs to be successful on the ice. Also, the Locker Room
will provide apparel and gear for all hockey fans. In order to ensure the Locker Room’s success,
a business plan has been created. The business plan provides a comprehensive overview of the
operations, human resources, marketing and financial aspects of the proposed company.
The Locker Room wants every customer to be ready to compete on the ice. In order to prepare
their customers for game time, the Locker Room must achieve specific objectives. These
objectives have been outlined as:
 Deliver superior hockey expertise to the customers
 Support customers in looking, feeling, and playing their best
 Offer high quality products at affordable prices
 Foster a brand identity of hockey expertise and quality products
With the continued growth in the retail industry, it is important for the Locker Room to
distinguish themselves as unique. The Locker Room strives to gain a competitive advantage
through the expertise and knowledge of their employees. The Locker Room will be located in
the shopping hub of Warman, Saskatchewan. With the recent population boom in Warman and
surrounding communities, this location will provide the Locker Room with a unique
opportunity. Situating itself near a major urban center will help ensure the Locker Room meets
its objectives.
The Locker Room will employ a staff that features one manager, two full-time sales associates,
and two part-time sales associates. All staff members will have proven to be knowledgeable
hockey experts. The Locker Room strives to maintain a supportive and knowledgeable hockey
community.
In order to meet their objectives, the Locker Room is focusing on Saskatoon and area hockey
players and families, who are between the ages of 12 and 35. In order to meet the growing
hockey industry demands, the Locker Room will provide high quality products for both male
and female players. The Locker Room will attempt to reach this target market through a variety
of promotional and branding techniques. The Locker Room will advertise through direct hockey
venues. The Locker Room plans to gain exposure through their website and social media pages.
Exposure will be gained in the hockey industry through hockey event sponsorship.
The Locker Room has a few different critical variables, but the most crucial variable is the
number of customers that enter the Locker Room and purchase an item. The financial analysis
shows that the number of customers is crucial to the success of the Locker Room. Upon further
evaluation, it is evident that the Locker Room is profitable with a net income of $48,946 in year
5 and an average owner compensation of $58,440 in year 5.
iii | P a g e
2.0
Business Introduction
2.1 Introduction
The Locker Room is a retail sporting goods store that offers a variety of hockey equipment and
apparel. The Locker Room will offer the following products and services:
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Skates
Sticks
Protective Equipment
Helmets
NHL branded jerseys and apparel
Skate Sharpening
Hockey apparel
Hockey Accessories (tape, laces etc.)
In addition to providing equipment and apparel, the Locker Room will also provide the unique
service of hockey expertise. All employees at the Locker Room will be knowledgeable experts in
the hockey industry. Providing this unique service will ensure that the Locker Room’s customers
are outfitted to their best.
2.2 Objectives
The Locker Room strives to have every customer feeling ready for the ice. In order to meet this
goal the Locker Room has outlined specific objectives:

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Deliver superior hockey expertise to the customers
Support customers in looking, feeling, and playing their best
Offer high quality products at affordable prices
Foster a brand identity of hockey expertise and quality products
2.3 Success Factors
To meet the Locker Room’s specific objectives there are several key success factors that must
be met. These key success factors are:
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3.0
Ensuring knowledgeable staff through proper hiring and training methods
Providing equipment that features the latest technology and trends
Supplying apparel that follows the latest trends and styles within the industry
Meet expected number of customers and projected sales goals
Striving to secure a loyal customer-base that appreciates the unique expertise of the
Locker Room
Operations Plan
3.1 Location
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The Locker Room is located in Warman, Saskatchewan at 520 Central Street. Warman is
approximately 20 km from downtown Saskatoon. The location within Warman is at the
Warman Plaza. The Warman Plaza is a shopping hub with many other retail outlets surrounding
the Locker Room. This location is located off the main street in Warman, which allows easy
access and a convenient shopping experience for customers.
3.2 Floor Plan
The Locker Room’s facility is 1450 square feet. Upon entering the facility there is a checkout on
the front left side. The skate sharpening area is located at the front on the right side. The skate
sharpening area is located here for customer convenience. This location allows quick access for
customers who only need their skates sharpened. In the middle of the store is product displays
and racks. Towards the back of the store is a skate display where the customers can be
personally fitted. The back of the store houses a storage area where extra product is kept. Also,
there is a staff room and office located in the back of the store.
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3.3 Business Hours
The Locker Room is open 7 days a week. The Locker Room will be closed for selected holidays.
For example, the Locker Room will be closed on Christmas Eve, Christmas Day, and Boxing Day.
The locker Room’s ordinary business hours are as follows:
Monday-Wednesday 10 A.M. to 6 P.M.
Thursday-Friday 10 A.M. to 8 P.M.
Saturday 10 A.M. to 6 P.M.
Sunday 12 P.M. to 5 P.M.
3.4 Suppliers/Service Providers
In order to prepare the Locker Room for business, some leasehold improvements will need to
be completed. New paint will be applied to the entire area. This paint will be provided by Home
Depot. Some electrical upgrades will be completed by Hunter electric Ltd. The Furniture needed
for Locker Room’s daily business will be purchased from Ikea and Home Depot. The furniture
needed will include: shelving, clothing racks, table, chairs, and benches. The Locker Room’s
electronics will be purchased from best buy. The Locker Room’s skate sharpener will be
purchased through Blade Master. The exact purchase amounts can be found within the Capital
Budget, see section 3.5. The Locker Room’s utilities will be supplied by Saskatoon Light &
Power, SaskTel, and Alarm Force. The service for interac transactions will be provided by
Moneris. The products the Locker Room will provide will be purchased directly from the
manufacturer. The Locker Room will offer the following brands such as Nike Bauer, Reebok,
CCM, and Under Armour.
3.5 Capital Budget
The Locker Room’s capital budget includes expenses from leasehold improvements and
equipment. The leasehold improvements for the Locker Room can be kept to a minimum as the
building was previously used for retail. The Locker Room will need some electrical upgrades and
sign installation. The majority of the capital budget will be spent on equipment. The Locker
Room will need all new furniture for its daily operations. One of the main selling features of the
Locker Room is the skate sharpening service. The Skate sharpening equipment will be the main
expenditure for the Locker Room. See below for the detailed Capital Budget.
3.6 Operating Expenses
The Locker Room’s operating expenses were estimated for the first 5 years. The Locker Room’s
building lease is calculated at $19.50 per square foot according to Colliers International. One of
the main operating expenses for the Locker Room is wages and benefits. The wages for the
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employees are calculated on an hourly basis and increase on a rate of 2.5% per year according
to the Government of Saskatchewan. For detailed human resource expenses, see section 4.6. In
order to calculate the yearly utility expenses an inflation rate of 2.5% was used. See the
operating expense table below.
3.7 Working Capital Planning
The Locker Room will receive financing in order to cover the capital costs. These capital costs
include the leasehold improvements, furniture, equipment, and the net working capital. The
total working capital costs for the Locker Room is $49,436. In order to cover these start-up
costs and have an emergency fund, the Locker Room will receive $55,000 in total financing. Of
this capital, $40,000 will be equity and $15,000 will be from a bank loan. This small loan will
help ensure that the Locker Room is profitable within the first couple of years. The Locker
Room’s equity will be provided by two shareholders. These shareholders are the director and a
silent partner. The silent shareholder is willing to be patient in receiving dividends. The Locker
Room will begin paying out dividends to the shareholders once the Locker Room’s profits are
greater than $10,000.
The Locker Room’s inventory has a turnover rate of 2.768 and lasts for approximately 130 days.
Inventory will be ordered by the director/manager with input from the sales associates about
what is popular and current trends.
Accounts payable to the suppliers will be 30 days from purchase. This is very common in the
retail and sporting goods industry. The Locker Room will not offer accounts receivables, as the
Locker Room will not be issuing their customers credit. All purchases must be paid in full at the
time of the purchase. The Locker Room will obtain a typical business license from the city of
Warman prior to starting business within the Warman Plaza shopping centre.
For a more detailed working capital plan refer to Appendix A.
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4.0
Human Resources
4.1 Organizational Structure
The Locker Room will be formed as a Private Corporation. A Private Corporation was chosen to
allow the shareholders to have freedom and control over the direction of the company. A
Private Corporation offers limited liability to the shareholders. As a private corporation, the
Locker Room would gain a tax advantage. A private corporation could allow future transfer of
shares, which could permit continuing operations.
The organizational chart below describes the Locker Room’s hierarchy. The Locker Room will
have two shareholders in the initial stages. One of these shareholders will act as director and
the other will be a silent investor for the Locker Room. In the initial stages of the Locker Room
the Director will act as manager. If desired to accommodate future needs, a manager could be
hired to coordinate the daily operations of the Locker Room. The sales team will consist of two
full-time sales associates and two part-time sales associates. All members of the sales team are
welcome to interact with the manager. The contribution of ideas and expression of concerns
from all members of the Locker Room staff is encouraged with open lines of communication.
The full-time sales associates will be trusted with a few extra responsibilities. For example,
opening and closing the Locker Room.
Board of Directors
(Shareholders)
Manager
Full Time Sales
Associates
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Part Time Sales
Associates
4.2 Job Descriptions
The Shareholders own the Locker Room. The duties of the shareholders include:
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Attending general meetings
Voting on important company matters
Choosing who is on the Board of Directors
Ensuring the Board of Directors are preforming their duties effectively
The Board of Directors control the general activities of the business. These activities include:
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Supervising the overall operations
Managing resources
Making general business decisions
Overseeing management duties
Attending Board of Director meetings
Controlling general financial activities and decisions
The Manager will oversee the daily operations of the company. The management duties
include:
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Performing administrative tasks
Supervising sales associates
Recruiting and training new staff
Assessing and evaluating the sales associate’s performance
Managing inventory and suppliers
Developing marketing methods and utilizing social media marketing
Coordinating weekly schedules and payroll
Controlling specific financial activities
The manager is required to have a university degree in commerce or business. It is preferred
that the manager has previous experience and a background in hockey. The Locker Room
boasts their experienced and hockey minded staff. This hockey knowledge and previous
experience will help ensure the Locker Room meets their expert standards.
The Sales associates will perform daily operational and sales activities. These activities include:
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Ensuring exceptional customer service
Assisting customers with questions and concerns
Checking out customer purchases
Sharpening skates
Monitoring inventory on display
Coordinating sales inventory
Opening and closing the store
Mentoring new employees
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It is preferred that the sales associates have previous retail experience, but not required. It is vital
for the sales associates to have a strong background in hockey with strong people skills.
4.3 Shareholder’s Agreement
The shareholders will hold an equal number of shares within the Locker Room. The
shareholders will each hold 50% of the shares with the opportunity to expand the number of
shareholders at a later date. As previously stated, the Locker Room will be a private
corporation.
4.4 Human Resources Strategy
The success of the Locker Room depends upon the atmosphere of the work place. The Locker
Room will strive to encourage a positive workplace. A positive workplace is partially dependent
on its staff. The Locker Room will attempt to recruit and hire positive, experienced, and
knowledgeable staff who are passionate about the game of hockey. One solution the Locker
Room will utilize to help keep their staff motivated and passionate is a staff discount. This
discount will allow staff to receive 30% off personal purchases and two free skate sharpens a
month. Also, staff will be provided with health benefits. In return for these benefits, staff are
required to follow certain regulations. For example, staff will be required to follow a dress code.
This dress code will require staff to wear sports apparel with closed toe running shoes and no
head wear. The staff will be expected to maintain a neat and professional appearance with a
visible company provided name tag.
The Locker Room will employ a recruitment strategy with specific qualifications and skills
specified for future employees. These qualifications will include experience and knowledge in
both the business and hockey industry. The Locker Room will target both past and present
hockey players. The Locker Room will target junior and university hockey players. The Locker
Room could arrange for a flexible schedule due to hockey commitments. The employees that
the Locker Room hires will undergo training on skate sharpening, general sales techniques,
product information, and other relevant procedures. Once hired, the Locker Room sales
associates will undergo a yearly review with a performance assessment and the opportunity for
bonuses or pay increases. The Locker Room’s employees are encourage to stay up to date and
knowledgeable about the hockey industry and relevant hockey products.
4.5 Weekly Schedule
This weekly schedule is a draft version to show the estimated hours and staff required to
ensure adequate staffing to meet the needs and demands of the customers. This schedule
could be revised according to future sales demands and patterns. This schedule could be
reviewed in order to accommodate the commitments of staff.
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4.6 Human Resources Expenses
The Locker Room salary and wage expenses for the first year will be $98,110. This expense
includes the manager’s salary and the sales associate’s wages. These wages will be predetermined, but as stated could change according to performance. The manager’s salary for the
first year will be $40,000 plus benefits. The full-time sales associates will earn $13 an hour and
the part-time sales associates will earn $12 an hour. The benefit expense for all employees in
the first year will be $13,696.
Please see the financial plan in Appendix A for a more detailed explanation of the human
resource expenses for the Locker Room.
5.0
Marketing Plan
5.1 Products/Service
The Locker Room will provide customers with all of the necessary equipment they will need for
their hockey season. The Locker Room will provide equipment for all skills and most age levels.
Also, the Locker Room will offer hockey related apparel for all hockey enthusiasts and fans. The
equipment and apparel provided will be from the highest quality brands available. The brands
initially supplied by the Locker Room will be Under Armor, Reebok, CCM, and Nike/Bauer. The
Locker Room will provide customers with hockey related services, such as skate sharpening and
maintenance. The Locker Room will provide these products and services with hockey expertise
and knowledge. This hockey expertise will be provided by knowledgeable hockey experts. The
hockey experts are familiar with the products and the game from personal experience. The
experts will be further trained in product specifications and technical traits to enhance their
existing knowledge. In addition to this hockey knowledge, the Locker Room’s expert sales
associates will provide excellent customer service according to the Locker Room’s expectations.
5.2 Price
The products that the Locker Room provides will be competitively priced according to local
markets. The Locker Room projects that the average prices for their products will be as follows:
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Skates sold at an average price of $500
Sticks sold at an average price of $100
Equipment and apparel sold at an average price of $80
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Skate Sharpening and accessories sold at an average price of $5
The Locker Room’s skate sharpening service will be offered at a reduced market price of $6. The
local competition offers this service at $8. The Locker Room believes that offering this service at
a reduced cost will help generate increased customer visits. The Locker Room plans to offer
sales on previous season’s stock in order to make room for new stock. The Locker Room will
host two sales dates throughout the year. These sales will be offered on December 27th and in
the early summer when the store might experience a slow period in sales. These sales will be
mainly advertised on their social media pages and website.
5.3 Place
As previously stated, the Locker Room will be located in Warman, Saskatchewan. Warman and
surrounding areas has a growing population and is approximately a ten minute drive from the
heart of Saskatoon. The population of Warman in 2011 was 7,084 and is continuing to grow at a
rate of approximately 48.5% since the previous census in 2006 (Governement of Canada, 2014).
The population of the nearby city of Martensville is 7,716 and is continuing to grow at a rate of
approximately 55% since the previous census in 2006 (City of Martensville, 2014). This
population growth is promising for the future outlook and sales prospects of the Locker Room.
The Locker Room will be situated in the shopping hub of Warman at 520 Central Street. This
location is on one of the main streets in Warman. This location was chosen as the number of
customers in the area will be of higher volume. This location is also conveniently located near
the Legends Centre. The Legends Centre is a sporting complex that includes a hockey rink. The
Legends Centre is approximately two blocks east and four blocks north from the Locker Room.
Having a location near this venue will help increase customer volumes.
Target Market
The Locker Room will target a specific market. Being located in a community near Saskatoon,
the Locker Room will focus on Saskatoon and surrounding areas. The Locker Room is unique for
its hockey emphasis and provided expertise. For this reason, the Locker Room will target hockey
players and enthusiasts. In order to narrow this focus, the Locker Room will strive to meet the
needs of hockey players between the ages of 12 and 35. This age was chosen as the majority of
hockey players demanding high quality products and expertise are teenagers or young adults.
The love of hockey is wide spread, as evidenced by the growing female hockey market. In order
to meet this growing demand, the Locker Room will offer products for both male and female
hockey players.
5.4 Promotion
Branding
The Locker Room aims to position itself as the expert hockey source for all hockey needs. The
Locker Room will be there for its customers from their locker room to the ice. This notion lead
to the development of the Locker Room’s slogan, “From the Locker Room to the ice.” The
location of the Locker Room will provide a small town hockey feel while generating city
business. The Locker Room’s location will help further position their brand identity.
9|Page
Business Cards
The Locker Room will have business cards made that can be given to customers in store or
provided as promotional tools at a variety of hockey events. This business card will display the
Locker Room’s contact information, location, and company logo. An example of these business
cards can be seen below.
Programs & Brochures
The Locker Room plans to develop a variety of promotional tools that will be available at diverse
hockey events. The Locker Room will place advertisements in select hockey team programs. The
Locker Room will advertise in different team programs alternating based on audience and event.
Also, the Locker Room will distribute brochures at select tournaments and events. This will help
increase exposure of the Locker Room.
Rink Board Advertisement
A rink board advertisement will be displayed in the Legends Centre hockey rink. The
advertisement will display the company logo and contact information. The rink board
advertisement will attract the target market that the Locker Room hopes to capture. The rink
board advertisement potentially could go into other rinks if this promotion tool is successful. An
example of the rink board advertisement can be seen below.
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Signage on Warman Plaza
A sign will be designed and placed on the main Warman plaza sign that will display the Locker
Room’s logo. This form of promotion will help customers locate the Locker Room. This will also
attract new customers that are in the area.
Ad in Yellow Page of Phonebook
The Locker Room will use an advertisement that will be located in the SaskTel phone. This will
provide customers with access to basic features such as: contact information, store hours, and
location. This will help reach audiences who don’t have access to social media or internet.
Social Media Pages
The Locker Room will use a few different social media outlets. These outlets will include
Facebook and Instagram. The Locker Room will use social media to generate “buzz” about the
company. The Locker Room will use these pages to advertise their products and services. Also,
the Locker Room can use social media to interact with potential and existing customers. Social
media will also be utilized to announce upcoming promotions and sales.
Website
The Locker Room will have a website designed by another company that will be launched prior
to the store opening. The website will feature the products and services the Locker Room
offers. Also, it will include the store location, hours, and promotions that are currently being
offered. The website will also display the contact information of the Locker Room and links to
their social media pages.
Sponsorship for Select Tournaments and events
In order to generate exposure for the Locker Room it will beneficial to sponsor select hockey
events. Events such as tournaments, playoff games, and showcases could be sponsored. For
example, the Locker Room could sponsor the Saskatchewan Junior Hockey League Showcase,
which is played at the Legends Centre each year.
Skate sharpening card
The Locker Room will also offer customers a skate sharpening discount card. This promotional
tool will give the customers a chance to purchase a pre-paid skate sharpening card. The card
will be a punch card that has ten skate sharpens on it. The customer will pay $50 for this card,
which provides them with a $1 discount on each sharpen.
5.5 Positioning Statement
The brand identity of the Locker Room will be targeted at being able to meet customer’s needs
of affordable quality hockey equipment and apparel while providing hockey expertise. The
positioning statement of the Locker Room is that “the Locker Room is a Sporting Goods Store
that offers quality specialized hockey equipment, provided by local hockey experts at an
affordable cost.” In order to help market the Locker Room’s brand identity, their slogan will be
used in several marketing campaigns.
5.6 Competition
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The Locker Room’s two main competitors are Olympian Sports and Al Anderson’s Source for
Sports. Similar to the Locker Room, Olympian Sports specializes in hockey equipment and
apparel with similar quality. Al Anderson’s offers a variety of different quality sporting
equipment. The Locker Room differentiates itself from Olympian Sports and Al Anderson’s by
providing hockey expertise. The relevant competition that the Locker Room will face is
described below according to specialization and quality of product.
The following chart analyses the main competitors in further detail. Each competitor is
described and classified according to location, specialization, and quality.
Name
Locker Room
Description/Image
Location
Specialized
Warman
sporting goods
store with expert
services
Olympian
Sports
Specialized
sporting goods
store
Saskatoon, Two
Locations
Al Anderson’s
General sporting
goods store
Saskatoon
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Specialization
Specialized
Hockey
equipment,
apparel, and
services
Specialized
hockey
equipment and
services.
General
sporting apparel
General
sporting
equipment,
apparel and
services
Quality
High quality
products and
excellent,
unique service
High quality
with good
service
High quality
with good
service
Sport Chek
Warman Sports
Canadian Tire
Walmart
General, extensive
sporting goods
store with sports
and outdoor
related apparel
Small accessible
pro shop that is
newly established
Saskatoon,
Multiple
Locations
All purpose
department store
with a sporting
goods section
All purpose
department store
with a sporting
goods section
Saskatoon,
Multiple
Locations
Warman at
Legends Centre
Saskatoon,
Multiple
Locations
General
sporting
equipment,
apparel and
services
General
sporting
equipment,
apparel and
services with
less quantity
General
sporting
equipment and
apparel
General
sporting
equipment and
apparel
Varying levels
of quality with
good service
Average quality
with adequate
service.
Low to medium
quality with
average service
Low to medium
quality with
average service
5.7 Policies/Purchasing Patterns
It is expected that both male and female hockey players and enthusiasts will do business within
the Locker Room. The average customer is expected to be a young adult or a parent buying
equipment for their child. The Locker Room is expecting the busiest months will be from
September to March, as this is the main months of the hockey season.
The Locker Room will implement some business policies. The Locker Room will enforce a return
policy of 14 days. Almost all products can be returned within this time period if in new
condition, with tags still attached. Upon returning a regular priced item a full refund can be
provided in the same form of transaction as the purchase, or a store credit can be offered. All
sale items will be final sale. The Locker Room will uphold the manufacturers’ warranty on all
hockey sticks. These hockey sticks must be returned within 30 days of purchase with receipt
and serial number intact and visible.
5.8 Marketing Budget
In order to adequately promote the Locker Room, a marketing budget was prepared to
accompany the marketing plan. The marketing budget is imperative to forecast future
marketing expenses while ensuring the Locker Room’s promotional needs are met. The first
year of marketing expenses for the Locker Room is broken down into several promotional
categories. This detailed budget can be seen below. In future years, the costs will increase
according to an inflation rate of 2.5%. The cost to develop the Locker Room’s website is
incurred only in the first year. The expense for sponsorship will increase to $5000 in the
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following years as the Locker Room has a larger marketing budget. The cost of the rink board
advertisement in following years decreases to $1200, as the initial cost to make the sign is only
incurred in the first year. For further details on the marketing budget and expenses refer to
Appendix A.
5.9 Estimated Sales Projections
The estimated five year sales projection for the Locker Room is based on an average number of
customers per day. This number of customers is estimated to increase every year as the Locker
Room increases in popularity. The number of customers the Locker Room expects is each
estimated to spend an average of $80. These purchases provide the locker Room with an
estimated sales volume for the next five years. For further detail on the Locker Room’s
estimated sales projections, see the chart below.
6.0
Financial Plan
6.1 Financial Breakdown
A detailed breakdown of the Locker Room’s financials can be found in Appendix A. This
breakdown contains an income statement. Included in this income statement is the Locker
Room’s operating expenses, retained earnings account, balance sheet, and cash flow
statement. In order to gain an in-depth understanding of the Locker Room’s financial plan the
following schedules are included:
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Schedule 1: Economic Variable
Schedule 2: Revenues
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
Schedule 3: Cost of Goods Sold
Schedule 4: Operating Expenses
Schedule 5: Capital Budget
Schedule 6: Financing Budget
Schedule 7: Debt Amortization
Schedule 8: CCA
Schedule 9: Income Taxes
Schedule 10: Investment Analysis
6.2 Critical Variables
The success of the Locker Room could be affected by one main variable. This variable is the
number of customers that visit the Locker Room per day. This variable is always influenced by
the average price of the purchase a customer makes. The number of customers that visit the
Locker Room per day is affected by the overall growth of the hockey industry. The Locker
Room’s success and profitability is extremely sensitive to this critical variable. The critical
variable of number of customers per day is further described in the break-even and sensitivity
analysis.
6.3 Break-even Analysis
In order to further understand the effect that the critical variable has on the Locker Room’s
success, a break-even analysis was completed. This analysis explains how many customers are
needed per day in order for the Locker Room to break-even. The break-even point was
calculated by changing the net income to zero. In the graph below both the break-even and
base case is displayed. Along the y-axis is the number of customers per day and the year is
along the x-axis. The blue line is the base case and the red line is the break-even point. In
analysis of this graph it is noted that the Locker Room will not be profitable in the first year and
will show a small profit in the second year. If all goes according to plan the Locker Room will
begin to see a healthy profit in the following years.
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6.4 Sensitivity Analysis
A sensitivity analysis was completed to understand how greatly the number of customers per
day affects the Locker Room. With the Locker Room’s base case of 10 customers per day the
Locker Room shows a feasible profit and owner compensation. If the Locker Room does not
receive this base case, the company may not be feasible. Receiving more customers than the
base case will allow the Locker Room to remain profitable and overall successful.
Customers/Day
8
9
10
11
12
13
Average 5 Year Profit
(314)
11,971
23,483
34,995
46,507
58,020
Average Owner Compensation
42,051
42,051
45,750
49,484
53,218
56,951
Feasibility
Not Feasible
Possibly Feasible
Feasible Base Case
Feasible
Feasible
Feasible
6.5 Cash Flow and Profitability
The Locker Room will experience a deficit in cash flow in the first year. This deficit is typical with
new businesses. After year one the Locker Room will experience a steady increase in their net
income and operating cash flow.
6.6 Average Owner Compensation
Average owner compensation was calculated to gain a better understanding of the Locker
Room’s feasibility. The average owner compensation was taken into consideration as the NPV
and IRR are not suitable indicators of feasibility. These are not suitable indicators due to the low
capital start-up costs. The average owner compensation of the Locker Room in the first five
years is $45,750. This value was calculated by using the director’s portion of the dividends and
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the manager’s salary as one person is responsible for both roles in the beginning. The silent
shareholder’s portion of the dividends was not included in this calculation in order to give a
more accurate understanding of the Locker Room’s profitability. The director/manager will not
see significant return on investment until years 4 and 5, when dividends begin to be paid out.
Understanding that the Locker Room will be a risky venture to pursue due to the sensitivity of
the critical variable. Upon assessment of the Locker Room’s average owner compensation it is
evident that the Locker Room could be a successful venture to pursue.
6.7 Contingency Plan
If projected sales and profits are not attained the Locker Room could look for an alternative
location. This location will have a less expensive lease. The Locker Room could look in the city of
Saskatoon in order to increase their surrounding population and hopefully in turn their number
of customers. If the Locker Room does not meet their projected number of customers per day
in the first year, they could increase their marketing techniques in order to draw more business.
6.8 Economic Forecast
For the purpose of this business plan, the Locker Room has assumed the Canadian economy will
remain stable for the next five years. This will allow the inflation rate to remain at 2.5% and the
debt interest rate at 9%.
7.0 Summary
The Locker Room is a hockey sporting goods store that provides products and services to
hockey players and enthusiasts. The Locker Room specializes in expert hockey knowledge in
order to help customers prepare for game day. Being located in the thriving city of Warman in a
shopping hub will provide the Locker Room with a unique opportunity. Through sponsorship
and promotional techniques at hockey events that are geared to hockey players and fans, the
Locker Room will gain a strong customer base. Although the Locker Room could be a risky
venture due to the sensitivity of its critical variable, the financial analysis has proven that the
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company potentially could be feasible. This business plan leads to the conclusion that the
Locker Room is a business that should be pursued. The Locker Room hopes to be there for its
customers “from the Locker Room to the ice.”
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References
City of Martensville. (2014). Demographics. Retrieved from
http://www.martensville.ca/index.aspx?nid=211
Governement of Canada. (2014). Focus on geography series, 2011 census. Retrieved from
Statistics Canada: http://www12.statcan.gc.ca/census-recensement/2011/as-sa/fogsspg/Facts-csd-eng.cfm?LANG=Eng&GK=CSD&GC=4711068
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Appendix A: Financial Analysis
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